Another type of “traditional”

bstreeter — Mon, 01 Feb 2010 00:00:00 +0100

There’s been a reaffirmation of late of the
concept of traditional banking. While there’s no official definition of
that term, our sense is that it is usually taken to mean the business
of raising deposits and using them to make loans. As many people have
observed, banking is a fairly simple business. Whether a person is any
good at it depends largely on how carefully they lend out the money and
how well they manage their cost of funds and operating expenses. It’s
more c [...]

As the second half begins

bstreeter — Fri, 01 Jan 2010 00:00:00 +0100

For more than a year the banking industry has faced the risk that its very future would be hijacked by the political reaction to the events of 2007-8. That the reaction was coming was certain. That something was needed was clear. You can’t come to the brink of financial and economic meltdown and not need changes.

ABA CEO Ed Yingling predicted over a year ago that bankers would face an onslaught of reform legislation the likes of which had not been seen since the [...]

Policy by horror story (Good stories needed)

bstreeter — Tue, 01 Dec 2009 00:00:00 +0100

“I took my in-laws out for a holiday brunch and put it on my debit card. Thank God my bank had overdraft protection, because I had forgotten to transfer in money to cover the meal!”

One good anecdote is worth a hundred pages of reasoned testimony, but like a two-edged sword, stories can work for and against you. In the case of overdraft fees, the horror story has ruled in Congress so far. It’s time to stop that.

The Federal Reserve just [...]

A window opens

bstreeter — Sun, 01 Nov 2009 01:00:00 +0100

Credit problems always develop in an economic downturn. If every bank advanced money only to those borrowers who they felt would remain unscathed through the worst-case scenario, the economy would shrink to levels of 30 years ago.

On the other hand, credit problems—or more accurately, the practices that lead to credit problems—also contribute to a downturn. Exactly where the line of demarcation falls between effect and cause is probably unknowable.

Watch out for the little guys

bstreeter — Thu, 01 Oct 2009 01:00:00 +0100

There’s a tendency in some circles to adopt a tone of condescension in speaking about community banks; the equivalent of the owner of a big dog patting a little dog on the head, saying, “There’s a nice a little dog.

Nice little dog, my foot. Ever seen a Jack Russell terrier? They’ll take on a Great Dane!

So it is with community banks. They’re sometimes painted with the brush of motherhood and apple pie, but behind that [...]

Please, no more “czars”

bstreeter — Tue, 01 Sep 2009 01:00:00 +0100

“Excessive compensation” is a close cousin to “obscene profits.” Neither is realistically definable. They are legitimate terms. It just depends which side of the paycheck you’re on.

“Excessive compensation” is a close cousin to “obscene profits.” Neither is realistically definable. They are legitimate terms. It just depends which side of the paycheck you’re on.

When motorists are paying twice as [...]

Obama plan won’t vacation

bstreeter — Sat, 01 Aug 2009 01:00:00 +0100

In the closing weeks of July, House Financial Services Committee Chairman Barney Frank tipped his hat to the industry by acknowledging at a press conference that the strength of the banking industry’s opposition to the proposed Consumer Financial Protection Agency, a major component of the Obama Administration’s massive regulatory restructuring plan, had surprised him. He postponed markup of the CFPA legislation until September, in part to allow supporters of the new agency time to c [...]

Dateline: Twitterverse

bstreeter — Wed, 01 Jul 2009 01:00:00 +0100

Britney Spears is following me, or, rather ABA Banking Journal, on Twitter.

Commentary: By Steve Cocheo, Executive Editor

Not that we care. They will soon join the ranks of attempted “followers” who we’ve blocked from having access to our bankerly “tweets.” Policing your followers list is a never-ending task. Anyone in the Twitterverse can start following you, though you can block their access after receiving t [...]

Turning point for credit cards

bstreeter — Mon, 01 Jun 2009 01:00:00 +0100

The industry just got a second slap in the face over credit cards—this one from Congress. The new legislation imposes all sorts of restrictions regarding pricing, rates, and practices, much of it already covered by the rules issued by the Federal Reserve late last year. It looks like Congress and the Administration wanted to get credit for helping consumers on an issue that has been fanned to red hot by media attention and consumer activists.

As a result, credit cards may [...]

Too big to manage? Not so

bstreeter — Fri, 01 May 2009 01:00:00 +0100

The comment was made recently by an elected official that perhaps “too big to fail” isn’t the point, but “too big to manage” is.

It’s neither. For a poor manager, a three-person department is too big to manage. Haven’t we all seen that? The size of an organization isn’t the determining factor, the capability of its management is.

(Actually, the thought that first came to mind when we read the above comment was: Congress i [...]

Enough already

bstreeter — Wed, 01 Apr 2009 01:00:00 +0100

“This too shall pass,” is a wise and comforting saying, but by no means does it imply simply waiting for a flood of trouble to recede. All floods recede in time, but you’ve got to do everything in your power to keep them from overwhelming you. Sometimes you win, sometimes not, but you never win if you don’t try.
The folks in Fargo, N.D., gave us a heroic and literal example of this just last month, as they battled the 100-year flood of the Red River. They never g [...]

Bad ideas you must fight now

bstreeter — Mon, 02 Mar 2009 00:00:00 +0100

In recent weeks one new idea, one new law, and one existing practice have moved to the forefront. All have the potential to drastically alter the banking industry as we know it.

The idea – is to nationalize banks. All sorts of people are weighing in on this. Some who should know better, support it.

Here’s a question: If the government failed to recognize, ignored, and to a degree encouraged some of the exces [...]

A time of testing

bstreeter — Sun, 01 Feb 2009 01:00:00 +0100

January, a difficult month in the best of times, was particularly doleful this year. Not even the presidential inauguration nor the heroics of U.S. Airways’ Capt. Chesley Sullenberger could thaw the country’s economic (and meteorological) chill for long.

For bankers in particular it was a tough month. Fourth quarter numbers and the resulting headlines were very negative. Not for every bank, of course. A group of community bankers in this issue (p. 14) discuss the wide [...]

Why a lending surge won't work

bstreeter — Thu, 01 Jan 2009 01:00:00 +0100

Congress has become increasingly strident in insisting that banks that received capital from Treasury lend that money.

The fact that the Capital Purchase Program was not intended to be used only for lending has been lost in the rhetoric. Hardly surprising since the program was a complete about-face from what Congress had authorized. Furthermore, the public, thanks to the consistent media labeling of the program as a bailout, which it’s not, is angry at banks [...]

Oh, those boring banks

bstreeter — Mon, 01 Dec 2008 01:00:00 +0100

Boring is popular, right now.

Whether you’re talking investments, cars, or real estate deals, “slick,” “glitzy,” “high-powered” are all in the doghouse for the moment. They’ll be back, of course. But for now they’re in hiding.

“Boring” isn’t really boring, however. The dictionary will tell you it means “not interesting, tedious.” In conversations with two bankers recently, both used t [...]

Visiting with history

bstreeter — Sat, 01 Nov 2008 01:00:00 +0100

It was the middle of the afternoon and he had a cold, making the familiar rumbling voice even deeper. With his still-tall frame filling a large desk chair, Paul Volcker, glanced at the list of questions he was holding and asked his guest, “Why did I agree to do this?”

The guest—yours truly—couldn’t answer his question as to why he agreed to do an interview for our 100th anniversary issue, but was grateful that he had. “I’m 100 [...]

P.T. Barnum capitalism

bstreeter — Wed, 01 Oct 2008 01:00:00 +0100

The country PAUSED LAST month to note the seventh anniversary of the Sept. 11 terrorist attacks. How ironic that the economic damage to the U.S. financial system that fateful day was far less than what we just witnessed.

By our own actions we did what a group of hate-driven, cowardly fanatics could not do. It’s a black eye for free markets, free societies, and capitalism. And that’s a shame, because enemies of our country and economic system will use it to [...]

Responsibility. Now there's an idea

bstreeter — Mon, 01 Sep 2008 01:00:00 +0100

Somewhere along the line most of us were advised to brush regularly, floss, avoid too many sweets, etc. Whether we heeded that advice was, and is, our choice, and the consequences of not doing so are ours as well.

Managing money, similarly, is a matter of personal responsibility, and one that is occasionally painful. It's not a perfect analogy but the point about responsibility is at the crux of the debate over a rule proposed in May by the Federal Reserve Board and the Off [...]

Manage the pendulum

bstreeter — Fri, 01 Aug 2008 01:00:00 +0100

If a ship springs a leak, it's a problem. If the passengers all run to one side thinking to save themselves, the ship will capsize. Now it's a disaster.

The same can happen in the current credit crunch without some quick action.

Most lenders today have not been through a down credit cycle before. Neither have most examiners. Add to that members of the media, few of whom have likely covered a credit crunch.

There are still som [...]

No trouble, no learning

bstreeter — Tue, 01 Jul 2008 01:00:00 +0100

You'd think, from reading or viewing the general media coverage of economic issues, that bankers are a bunch of fools, crooks, greedy so-and-so's, or all three. Bankers are a convenient and popular target. Even in the best of times, bankers are rarely seen as heroes. Not collectively, anyway. So you have to steel yourself-or put on a Teflon shell-during this difficult period, and take satisfaction from the good things you help accomplish.

While no one should entirely d [...]

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